Purchase is like direct expenses?

A/c entries 2727 views 3 replies

Dear All

please clear my friends doubts

Purchase a/c is ?

....................Trading A/c (P&L A/c)......................

To Purchase A/c (its also like Expense)

To  Direct Expenses                                                                         By Sales

                                                                                                             (Gross Received)

To Gross Profit c/d

________________________________________________________________

                                                                                                              By Gross Profit b/d

To Indirect expenses    

To Net Profit

=========================================================================

my query is we want to khow if our legal advisor say gross received is 12000.00, expense is 10000.00 and net profit is 2000.00

what can i take the meaning of expense (10000.00) is  include of purchase value + direct exp.+indirect expense or other ?

if i am wrong or right please guide me and my friends too.

Thanks

With Regards

Arshad

 

Replies (3)

ur legal advisor is not a finance guy.

now ask him what is the nature of expense.

any expense that can be traced to the cost of the product is direct expense. simlarly any expense incurred for bringing ur raw material to ur factory is also a direct exp. eg freight , carriage inwards etc

all the other types of expense are indirect expenses.

so accordingly ur GP & NP will change.

Originally posted by : FARHAN ABID

ur legal advisor is not a finance guy.

now ask him what is the nature of expense.

any expense that can be traced to the cost of the product is direct expense. simlarly any expense incurred for bringing ur raw material to ur factory is also a direct exp. eg freight , carriage inwards etc

all the other types of expense are indirect expenses.

 thanks for reply farhan bhai

the actual problem as under

me and my friend doing a backlog accounting of a party ,they doing buisness in auto parts , party doing accounting in manually, they dont khow the accounting mathod , so party legal advisor filling the return without the details of trading a/c , advisor make the balance sheet only no trading a/c (P&L A/c), now the party going to face sales tax assesment financial year 2007-2008, so that advisor give us only three figure as under.

gross received (Sales a/c) Rs.590000.00

expenses Rs.480000.00

n.p. Rs.110000.00

now we are doing transaction our as per paper record we find the detail as attach file.

boss if you have any solution for how we find opening stock a/c please suggest the method.

thanks to you

Arshad

 


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